Green Retirement

Who knew?  A whole week, not just a day, has been set aside by the U.S. Government to celebrate saving for retirement.  This is National Save For Retirement Week!  Congressional Representatives Allyson Schwartz (D-PA) and  Sam Johnson (R-TX) introduced H. Res. 662 on July 20, 2009, which was duly passed by the House, declaring the week of October 19, 2009 “National Save For Retirement Week.”

In honor of National Save For Retirement Week, this Green Retirement article shares with American workers, two ways to save over a million dollars towards retirement.

Save 20% for 20 Years
For example, a couple earning $80,000 per year who saves and invests 6% of their income, would have $500,000 in retirement savings after 20 years.  If they increase their savings rate to 20% of their income, after 20 years, they could have $1,600,000 in retirement savings.  Enough savings to enjoy a comfortable and secure retirement.

How do you save 20% of your income? Spend 20% less of your income.  If you earn $80,000 per year - save $16,000 per year towards retirement.  After giving 30% of your income to the government in taxes, you will be left with $54,000 to spend and invest, taking out $16,000 per year to save for retirement will leave you with $38,000 per year for living expenses - a budget of $3,167 per month.  Can you do it?

Green Retirement Planning Software includes budgeting and expense tracking, designed to make creating, and maintaining a budget simple and easy.

Save Your Raise
If you can’t cut your current spending, you are living paycheck to paycheck, there is another way you save a lot of money for retirement - save your raises. Every time you get a raise in salary, save it and invest it, do not increase your consumption.  If you earn 80,000 per year, and next year you get a 5% raise, save and invest the difference between your two paychecks, and after 20 years you could have $1,750,000 in retirement savings.

Using this retirement savings method enables you to gradually increase your savings rate by maintaining your current consumption.  Whichever method you choose to increase your savings, you can do both at the same time,  make sure that you get out of debt before you start saving.  Paying off a 19% credit card balance, is the same as earning 19% returns in the stock market, and it will enable you to save even more towards retirement once the debt has been paid off.

How Much Retirement Savings Do You Need?
Saving for retirement is a great idea, everyone should do it, but the question you should be asking when you start saving is “how much savings do I really need for retirement?”  Traditional retirement planning calculates your retirement savings needs based on your salary.  A worthless guess that over-estimates your retirement savings needs - forcing you to work longer than necessary.  Green Retirement Planning calculates your retirement savings needs based on how much you will spend in Retirement.  A much more accurate method that enables you to control your retirement savings needs and when you can retire.

For example, the couple who earns $80,000 per year and has a $3,167 spending budget, traditional retirement planning calculates that the couple will need $1,600,000 to retire, while Green Retirement calculates that the couple needs $950,000 to retire.  That is almost half the amount of necessary retirement savings between traditional and Green Retirement planning.

Green Retirement enables individuals to retire with hundreds of thousands of dollars less in savings, and a decade or more earlier, than is possible with traditional retirement planning.  Saving money for retirement is good, saving more money than you need for retirement is bad, it keeps you working longer.  You can find out how much savings you need to retire by trying our quick retirement calculator, or by using our free retirement calculators, on the Green Retirement website.

So, there you have it, two green ways to save over a million dollars for retirement.  Save 20% of your salary, save your raises, or do both.  And finally, in honor of National Save for Retirement Week, Green Retirement is offering readers an incentive to get  started saving for retirement - Free Retirement Planning.  Find out for free, when you can retire, and how much savings you need for retirement.